South Korea's National Pension Service Real Estate Investment Office forced through a 252 billion won ($189 million) investment in 'The Exchange Seoul' development project in 2024 despite internal opposition and risk warnings, according to internal investment review documents obtained by Edaily. The pension fund shouldered 92.6% of the project's total equity, with two internal committee members explicitly voting against the deal citing legal review concerns, permit delay risks, and tenant eviction uncertainties. The investment decision coincided with the hiring of a Samsung Securities alumnus with past ties to senior Real Estate Investment Office officials at project manager Koramco Asset Trust, triggering allegations that the pension fund leveraged its investment position to influence personnel decisions — claims both organizations deny.
National Pension Service Invested 252 Billion Won Despite Internal Risk Warnings
Internal investment review documents show the National Pension Service committed 2,520 billion won to 'The Exchange Seoul' development project in the Mugyo-dong district in 2024. The total equity for the deal stood at 2,720 billion won, meaning the pension fund's contribution represented 92.6% of all equity capital. The remaining funds came from GS Engineering & Construction, Citycore, and the asset manager.
The internal review process documented multiple concerns about low returns and risk factors, with several participants deeming the investment unsuitable. The risk officer and overseas bond office director — both internal committee members — explicitly opposed the investment based on legal reviews. Their core objections centered on property boundary encroachment issues, permit approval delay possibilities, and tenant eviction risks. Given that the National Pension Service bore 92.6% of total equity, documents warned that if these development risks materialized, the economic damage to the fund would be substantial.
Internal warnings also addressed the appropriateness of the target return rate (Net IRR 14.07%) for this unpermitted development project. Documents stated that due to the nature of development projects with many variables including construction costs and interest rates, if risks materialized, the fund might only recover principal-level amounts rather than achieving target returns.
Despite opposition from internal committee members and risk warnings, the proposal passed through the Investment Committee with strong support from the Real Estate Investment Office and ultimately cleared the final decision-making body. The Chief Investment Officer, law firm Gwangjang, and Bain & Company — external committee members — reportedly voted in favor. Industry observers characterized the decision as unusual compared to the National Pension Service's historically conservative approach to domestic development projects.
One investment banking industry source familiar with the matter stated: "At the time of the 2024 investment, the National Pension Service was in a period of avoiding domestic development project investments due to political burden and various reasons. Moreover, there were serious internal concerns about whether it was appropriate for the National Pension Service to bear over 90% of equity in a deal with significant development risks."
Hiring Allegations Surface Around Investment Timing
Allegations of conflicts of interest emerged surrounding personnel hiring during the investment process. After the National Pension Service decided to proceed with the large-scale investment amid internal opposition and around the time actual investment funds were disbursed, an individual with a work history at the same company (Samsung Securities) as senior officials in the National Pension Service Real Estate Investment Office was hired at Koramco Asset Trust, the development manager for The Exchange Seoul.
The Samsung Securities alumnus, identified as Mr. A, joined Koramco in October 2024 and remains employed there. The timing overlap between the large investment decision and the hiring led to internal speculation at the National Pension Service about "possible hiring instructions using National Pension investment leverage and potential abuse of power toward Koramco," though these concerns did not become public at the time.
This was not the first time hiring abuse allegations arose in connection with The Exchange Seoul investment. In recent years, the National Pension Service reportedly received multiple complaints alleging that the Real Estate Investment Office pressured global and domestic asset managers regarding dismissals and hiring requests for CEO positions and key posts. However, no substantial investigations or accountability measures followed these allegations.
One individual who submitted a complaint to the National Pension Service stated: "The National Pension Service remained unmoved. No matter how many cases we presented of asset manager pressure, hiring instructions, and dismissal coercion, and no matter how we appealed for investigations, they did not act."
The hiring abuse allegations resurfaced during the recent failed attempt to replace the general partner (GP) for 'Yeoksam Centerfield,' a 4 trillion won asset. The National Pension Service designed an unconventional settlement structure when designating Koramco Asset Management as Centerfield's new GP. The Real Estate Investment Office's attempt to transfer management rights to Koramco Asset Management was ultimately rejected by the Alternative Investment Committee due to insufficient legal and economic justification for large advance payments. The National Pension Service audit office's identification of potential human conflicts of interest with Koramco Asset Management reportedly played a decisive role in the proposal's rejection.
Former National Pension Service Fund Management Headquarters Investment Support Division Head A retired last year and rejoined as Jeonju branch office head at Koramco Asset Management in early this year. Shortly after Mr. A's arrival, Koramco Asset Management emerged as a Centerfield GP replacement candidate, prompting criticism that controls on conflicts of interest involving former employees were not functioning properly.
National Pension Service and Koramco Deny All Allegations
Koramco completely denied the related allegations. Koramco stated: "Manager A is not involved in any work related to The Exchange Seoul," adding "There was absolutely no recommendation or opinion intervention from personnel at external organizations including the National Pension Service during the hiring process."
Koramco explained: "The Jeonju branch office was opened as a substantive base in line with the government's regional balanced development policy and the industry's general trend, and Director A is only responsible for discovering business opportunities in the Honam region and researching the regional market." The company added: "Investment proposals to the National Pension Service, external relations, post-investment management of existing deals, and communication related to Centerfield GP replacement are all headquarters-exclusive duties in which he is not involved at all."
Koramco further stated: "We complied with legal re-employment restriction reviews before hiring, and after compliance officer review, we applied information barriers excluding him from work dealing with the corporation."
Koramco also clarified: "The Exchange Seoul and the Centerfield GP transfer are separate unrelated matters, and all processes proceeded through open competition with competitors on equal footing, making preferential treatment impossible."
The National Pension Service maintained a formulaic position that no procedural problems existed. Regarding The Exchange Seoul investment, the National Pension Service stated: "It is difficult to confirm specific details about individual assets," while noting "Investment proposals are legally processed through the Investment Committee, Alternative Investment Committee, etc., in accordance with Fund Management Regulations and guidelines."
On hiring allegations, the response was: "We cannot confirm matters related to specific individuals' personnel and hiring, and these are matters to inquire with the relevant asset manager."
Regarding former Division Head A's move to Koramco, the explanation was: "Verification of conflicts of interest including transaction restrictions on institutions that hired retired corporation executives is strictly conducted according to internal regulations."
On May 16, the National Pension Service placed the Real Estate Investment Office director on standby assignment following approval by Chairman Kim Sung-joo.
FAQ
What did the National Pension Service invest in despite internal opposition?
The National Pension Service invested 252 billion won in 'The Exchange Seoul' development project in 2024 despite internal committee members voting against the deal due to legal concerns, permit delay risks, and tenant eviction uncertainties. The pension fund bore 92.6% of the project's total equity.
Why are there hiring allegations related to this investment?
Allegations arose because an individual with past work ties to senior National Pension Service Real Estate Investment Office officials at Samsung Securities joined Koramco Asset Trust in October 2024, around the time the pension fund disbursed investment funds. This timing led to internal speculation about possible hiring instructions leveraging the investment position, though both organizations deny any impropriety.
